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Wednesday, September 19, 2007

Rakesh Jhunjhunwala - the Indian bull


Good read...

Sunday, September 16, 2007
Rakesh Jhunjhunwala - the Indian bull

It is 12.30 pm at RaRe Enterprises, Nariman Bhavan. There are five
monitors showing more red than blue. The market is facing a blood
bath. The Sensex is falling. In the thick of the action, Rakesh
Jhunjhunwala turns from these screens, he is unruffled.

There is a massacre happening as investors lose wealth but Mr
Jhunjhunwala looks at you almost bored and says "lets not discuss the
markets". The biggest investor in India is chewing paan as he loses
wealth on his screens. He lights a cigarette. He loosens his white
shirt. He has not worn a tie for the last five years.

"I know I am losing wealth but should I let this bother me? I don't
think so. I would be crazy to look at my wealth like this. I believe
that India stands on strong fundamental grounds and over a period
things are only positive. But please do not interpret this as Rakesh
Jhunjunwalla is saying that the Sensex is going to touch 40000. Some
day it may touch. But who knows when?"

For a man who purchased Tata Tea for Rs 5000 when he was only fifteen
years old, Rakesh Jhunjhunwala has a total networth of ap-proximately
Rs 6000 crore along with his wife Rekha Jhunjhunwala. The exact value
of the portfolio is something he doesn't like to talk about.

He doesn't have any rules for his science of investing. But his ap-
proach is fundamental and takes a long-term view thus he is also re-
ferred as the Warren Buffet of India. Jhunjhunwala has never met
Warren Buffet but admires and even follows his style of investment.

"Don't insult the great man by comparing me to him. I am young and
I'm constantly learning. There is so much to learn from others." He
pauses and refuses a phone call from a big corporate house in
India. "But at the end of the day I want to be only Rakesh
Jhunjhunwala and nobody else", he says.

Retail investors, analysts and fund managers always want to know what
he is buying. Everybody wants to be a part of Rakesh's stocks. He
knows that. He leans back and looks at you and tells you that he is
not an advisor or a fund manager.

He and his wife came into the limelight with Crisil Limited. At the
end of April 2005 he was holding 14.26% of the company, accounting
for Rs 70 crore. In the same year the couple made Rs 27 crore after
they sold out to the S&P open offer at Rs 775 per share. Today his in-
vestment in Crisil is worth more than 200 crore and the holding
accounts for 7.63% of the entire company. In all the companies that
he has invested, it is this investment that has given him his famed

In India, bull runs have been associated with certain individuals. In
the nineties it was Harshad Mehta and in early 2000 it was Ketan
Parekh. But Jhunjhunwala does not like to be associated with any
booms. He believes that the market is above individuals. Individuals
can be associated to excesses in the markets, but not to the phase of
the markets itself, he believes. It is like if the market is at a P/E
multiple of 20, an individual might just make investors believe that
the P/E should be 22. He thinks that individuals who believe that
they are bigger than the markets do not last for a long time.

"The market is rational. An individual can never be smarter than the
market", he says and his phone rings. Someone wants to sell him a
credit card or personal loans. He politely refuses and drags on his

"The market is about greed and fear. Sometimes there is too much
greed and sometimes there is too much fear. It has a lot to do with
the psychology of the market. You have to sometimes read the market
like you read an individual", he adds.

But Mr Jhunjhunwala has not taken any courses in psychology or
behaviorial finance to understand the psychology of the market. He
has always believed that psychology cannot be learnt in classrooms.
He has learnt his lessons in finance by practicing them and never
believed in borrowed wisdom. He has liked his experience first
hand. "I have experienced the markets from its core. You know I was
there during the day of the bomb blasts when it happened. I have seen
ups and downs so my understanding of the market is from being in

That is probably why international fund managers like to spend time
with him to understand the Indian equity market. He meets at-least
two international fund managers a week. Probably that is where he
markets or tries to sell the India story to the global equity fund
managers. He doesn't like it when he is referred in this context.

"How can you sell the Indian equity to the global fund manager? Is it
an FMCG product like toothpaste or a shampoo? These fund managers are
here because they believe in the fundamentals of the country. Not
because a Rakesh Jhunjhunwala wants them to buy Indian equity". He
gets slightly excited.

Incidentally, foreign investors are selling Indian equity as global
markets are facing a liquidity crisis. Those who have purchased the
India story are jittery. Highly leveraged funds that invest into
global markets based on borrowed money are facing the heat. They have
purchased assets that they are not able to value. They don't even un-
derstand the nature of these assets.

As the ground beneath their feet starts to shake, Rakesh Jhunjhunwala
sits firm. He was in Lonavala watching movies when the crisis was
very severe. He is patient and knows that this shall also pass. The
red on the screen will turn to blue. The market will once again be
the winner. Mr Jhunjhunwala will remember this. His greatest fear -
he might fall prey to his own philosophy. The market will remain
above all individuals.

At a time when the market is going through volatility and an
uncertain phase, Jhunjhunwala has no advice for the investors. "I
don't advice anybody. I don't manage anybody's money. I manage my
wife's money because I don't have a choice." He smiles and stubs his

at 5:50 PM

SEARCH: Rakesh Jhunjhunwala

Niteen S Dharmawat
Mobile: 9850571857

IMPORTANT DISCLAIMER: Investment in equity shares has its own risks.
Sincere efforts have been made to present the right investment
perspective. The information contained herein is based on analysis and
up on sources that we consider reliable. I, however, do not vouch for
the accuracy or the completeness thereof. This material is for
personal information and I am not responsible for any loss incurred
based upon it & take no responsibility whatsoever for any financial
profits or loss which may arise from the recommendations above.

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